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Petition: M&K Employee Solutions v. Trustees of the IAM Pension Fund, No. 23-1209 (July 3, 2025)
Decision Below: 92 F.4th 316 (D.C. Cir. 2024)
Issue: Whether 29 U.S.C. § 1391’s instruction to compute withdrawal liability “as of the end of the plan year” requires the plan to base the computation on the actuarial assumptions most recently adopted before the end of the year, or allows the plan to use different actuarial assumptions that were adopted after, but based on information available as of, the end of the year.
The Employee Retirement Income Security Act (ERISA) is a federal law that governs private retirement plans with the goal of ensuring that employees receive their promised pension benefits. Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr., 508 U.S. 602, 607 (1993). ERISA regulates both single-employer and multiemployer pension plans (MPPs). In MPPs, several employers pool their contributions into a single fund to pay benefits to retirees. Id. at 605; 29 U.S.C. § 1002(37)(A).
An employer is free to withdraw from an MPP at its discretion. But without guardrails, employers would be incentivized to withdraw from a “financially shaky multiemployer plan,” leaving the MPP underfunded for its employees. Milwaukee Brewery Workers’ Pension Plan v. Jos. Schlitz Brewing Co., 513 U.S. 414, 416-17 (1995). To alleviate this problem, the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) was enacted, which requires a withdrawing employer to pay out its share of the plan’s unfunded vested benefits. 29 U.S.C. §§ 1381(a), (b)(1). This is called the employer’s withdrawal liability. The withdrawal liability must be calculated “as of” the measurement date, which is the last day of the preceding year. Id. § 1391. For example, if an employer withdraws on June 5, 2025, its withdrawal liability is calculated as of December 31, 2024. When an employer withdraws from an MPP, the pension fund’s manager will hire an actuary to determine withdrawal liability. In determining withdrawal liability, an actuary must make assumptions about the future that are reasonable and lead to best estimates of the liability. Concrete Pipe, 508 U.S. at 609.
In this case, the actuary for the IAM Pension Fund, an MPP, made assumptions for withdrawal liability in November 2017. Then, in January 2018, the actuary made new assumptions based on information that was available in December 2017. M&K, an employer who contributed to the IAM Pension Fund, decided to withdraw from the MPP in 2018. The MPP’s actuary used the January 2018 assumptions to calculate M&K’s withdrawal liability, creating an additional $4.3 million in liability for M&K compared to the November 2017 assumptions.
Following arbitration, the arbitrator decided in favor of M&K, requiring the MPP to use the November 2017 assumptions. The MPP appealed and the U.C. Court of Appeals for the D.C. Circuit found that it was permissible for the MPP’s actuary to use the January 2018 assumptions because the assumptions were based on information that was available to the IAM Pension Fund on the last day of the preceding year—December 31, 2017. M&K sought Supreme Court review.
There is a circuit split regarding interpretation of the phrase “as of the end of the plan year” in the MPPAA. The Second Circuit requires assumptions that were in place on December 31 of the preceding year and does not allow for change in the actuarial assumptions. Nat’l Ret. Fund v. Metz Culinary Mgmt., Inc., 946 F.3d 146 (2d Cir.), cert. denied, 141 S. Ct. 246 (2020). The D.C. Circuit, in contrast, permits assumptions to be determined after the end of the year so long as the assumptions are based on information available as of the end of the previous year.
What's at Stake
Millions of dollars of promised pension benefits are at stake in this case. Even seemingly small adjustments in withdrawal liability interest rate assumptions can make a difference of millions of dollars for what employers must pay to withdraw from an MPP, and, in turn, the funds available for employees and retirees of a withdrawing employer.
In a 2014 analysis, the U.S. Department of Labor found that one in four pension plan participants is covered under an MPP. These MPPs provide retirement funds to an estimated 10.1 million employees throughout the U.S. and are prevalent in specific sectors such as construction and transportation. Employees covered by these MPPs rely on their employers to contribute what they owe into the plans. Employees, including many older adults, could lose out on millions of dollars of hard-earned pension benefits should the Supreme Court rule in favor of M&K.
Lauren Naylor, LNaylor@aarp.org
Stefan Shaibani, SShaibani@aarp.org
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